Transparency data

25 November 2024 minutes

Published 13 January 2025

Meeting details

This meeting was held on 25 November 2024 from 2pm to 3:30pm in the conference rooms at the Association of the British Pharmaceutical Industry (ABPI) offices, Hay’s Galleria and on Microsoft Teams.

The chair was Tom Keith-Roach.

Minutes were taken by Pinchas Kahtan.

Attendees

From the Department of Health and Social Care (DHSC):

• Gila Sacks
• Noah Kidron-Style
• Richard Mattison
• Tom Slingsby
• Simon Roer
• Bilal Evans
• Alison Hardaker
• David Barley
• Ishi Shrivastava
• Ana-Maria Taradaciuc
• Thomas Darwent
• Deanne Johnson

From NHS England:

• Jack Turner
• Fiona Bride
• Pete Scott

From ABPI:

• Tom Keith-Roach
• Roz Bekker
• Russell Abberley
• David Watson
• Kim Assender
• Paul Catchpole
• Joe Edwards
• Pinchas Kahtan

From the devolved governments:

• Cathy Harrison (Northern Ireland)
• Alison Strath (Scotland)
• Andrew Evans (Wales)

From the Office for Life Sciences (OLS):

• Hannah Lom
• Alex McLaughlin

From the National Institute for Health and Care Excellence (NICE):

• Helen Knight
• John Spoors
• Arron Dunphy

From the British Generic Manufacturers Association (BGMA):

• Mark Samuels (observer)

From the Ethical Medicines Industry Group (EMIG):

• Leslie Galloway (observer)

From the BioIndustry Association (BIA):

• Martin Turner (observer)

Introductory remarks

Tom Keith-Roach (TKR) welcomed everyone to ABPI and gave thanks for everyone’s continued hard work. TKR acknowledged the group’s responsibility according to its terms of reference - to oversee and deliver the 2024 voluntary scheme for branded medicines pricing, access and growth (VPAG). In financial terms, the scheme represents a bold new approach, which we need to focus on successfully delivering.

TKR recognised that the scheme represents a partnership between government and industry on key aspects of UK branded medicines policy. A successful scheme will mean delivery both against the letter and the spirit of our commitments. The operational review agenda is structured around this and 3 objectives:

• improving access to medicines for patients
• safeguarding the financial sustainability of the NHS
• boosting UK economic growth

TKR thanked everyone for the work that had already gone into delivering the scheme, especially from NHS England and DHSC, and recognised the tone of collaboration. He recognised that approaching year end, industry would need to understand key information relating to the scheme - settling reference price data and understanding newer medicines rates - so that companies can plan accordingly.

TKR welcomed observers to the meeting, from BGMA, BIA and EMIG, noting that no matters from the observers have been raised to the chair in advance of the meeting.

TKR asked attendees whether there were any comments on the terms of reference. Mark Samuels raised one query to be discussed with DHSC. 

Minutes of the last meeting

TKR acknowledged that all actions have been completed other than for DHSC to send communications to companies informing them about the top-up exemption process. There has been consistent interest from companies on this question, which is on the agenda for discussion today.

VPAG objective 1: patient outcomes and a healthier population

Chapter 3 updates

Jack Turner (JT) described the approach to delivery of chapter 3, and that NHS England would share accompanying slides soon after the meeting.

JT acknowledged that the current programme of work was different to the previous scheme. There were plans for each of the areas under consideration, updated on a bimonthly basis between NHS England, ABPI, OLS and NICE.

JT set out governance arrangements for the work - a UK wide working group ensuring the join-up of government bodies - with an overarching committee meeting in January 2025 and 2 working groups focusing on devices and information sharing. Terms of reference and invites for this group were shared on Friday 22 November 2024, and will focus on horizon scanning and information sharing from the length of the pathway from licence to bedside.

JT acknowledged that it had been agreed between NHS England and ABPI that the access pathway guide in development would be delayed very slightly to align with Innovative Licensing and Access Pathway (ILAP) 2.0, but that this delay will also be used to ensure that there will be touchpoints with industry for comment.

JT set out the NHS England view on uptake. NICE committed to do more technology assessment (TA) incorporations with a 2025 delivery target of 170. NICE and NHS England are also running a pilot of the implementation toolkit model.

JT updated on NHS England’s commitment to update clinical job descriptions. NHS England has worked with ABPI to amend job description wording for over 240 regional and national clinical directors. JT recognised there had been some questions from industry about whether these job descriptions could be applied retrospectively, but NHS England had concluded that, for legal reasons, it did not believe this was possible. However, to move beyond the wording of the commitment, the National Medical Director has communicated new responsibilities to clinical leaders via email, and there are further conferences planned with medical leaders where the wording change and new responsibilities will be discussed.

JT recognised that the commercial environment was a key area of focus for industry and recapped that NHS England had held 2 consultations over the summer. The first consulted on changing the threshold for the Budget Impact Test (BIT) from £20 million to £40 million. Respondents overwhelmingly supported this move, and it’s scheduled to come into effect from 1 January 2025, with a consultation response issued before Christmas.

The second consultation this year was with reference to the first commercial framework (CF) update. This consultation was limited in scope as a broader second consultation is planned for 2025. The present consultation was specifically aimed at updating existing commercial flexibilities to be more explicit about when they may be available. NHS England plans that combination pricing and patient access scheme (PAS) principles will largely be incorporated into the CF as per the wording that was consulted on.

On indication specific pricing (ISP), NHS England is aiming to be more explicit about how each of the current requirements can be met, increasing industry predictability. JT also signalled a likely move to a more permissive approach, reducing the requirement of all commercial flexibility to need to demonstrate a ‘unique circumstance’ - though caveated that this has not yet been signed off at a ministerial level. JT also set out NHS England plans to take a more permissive approach with respect to data for ISP, still preferring NHS data but allowing the use of good quality industry data where it exists.

Roz Bekker (RB) expressed support for this work and thanked JT for the summary. RB noted the importance of the second CF consultation, not only for UK affiliates but for global boardrooms. RB noted the importance of reviewing the ‘at or below’ principle, and asked whether NHS England could share a version of the revised CF prior to publication so that companies could warm up global colleagues to the changes, ensuring the right level of optimism with respect to these changes. Russell Abberley (RA) reinforced RB’s points regarding the importance of warming up global boardrooms, and asked JT what the targeted publication date was for the revised CF. JT noted that the aim was to publish this calendar year but could not give a firm date due to the approvals process they needed to go through.

Fiona Bride acknowledged industry concerns about the ambition of the second CF consultation, setting out that NHS England would aim to conduct the consultation in the same way as the first, starting with an open discussion on scope with industry.

TKR acknowledged on behalf of industry that there was significant work underway, that we should welcome changes to job descriptions and the pathway guide, which should be accelerated if possible; but that industry was keen to see an ambitious scope in the second CF consultation in summer 2025.

VPAG objective 2: financial sustainability of the NHS

Scheme metrics and data

David Barley (DB) summarised actions from the last meeting, and thanked colleagues from ABPI, NICE, NHS England and OLS for their help delivering a timely metrics pack, in line with action 5 from the last operational review. DB noted changes to the format of the metrics pack to link each metric to a VPAG objective.

DB noted that there had been a pre-meet with ABPI on 18 November 2024 to discuss the findings of the metrics pack. The main things to note from this meeting were that the newer to older medicines split had not been shared in this review, but that future iterations would focus on newer medicines growth. DB also noted industry’s interest in metrics related to the exceptional pricing process, and overall links between metrics and the successful delivery of VPAG objectives.

DB noted that new active substance (NAS) sales had risen by £10 million, slightly lower than typical values - the number of NAS launches had fallen versus the previous quarter, but the 12-month rolling average values were similar to values seen under the previous scheme, the voluntary scheme for branded medicines pricing and access (VPAS).

DB noted that VPAG membership increases were driven by rising small company members, and that VPAG payments in Q2 have stayed constant since Q1 2024.

DB noted that on the exceptional pricing treatment, there had been a rise in applications not granted in Q1, but that rise had been moderated in the next quarter. Of all the applications made since the start of the year, approximately half of these had now been completed as successful, with 10 currently in progress - the plurality of these being because DHSC was waiting for further information from companies.

Kim Assender (KA) thanked DB for this piece of work and for the excellent collaboration in the lead up to the meeting. KA noted the really marked improvement in the metric pack since the first meeting. KA expressed that one of the key things to understand with respect to the metrics is that we are still very early in the scheme, and that at this point the open dialogue is really important as we continue to evaluate the metrics fit for measuring the scheme. It’s foundational to the success of the scheme.

TKR thanked colleagues for this work and added that these broader metrics on access and uptake - from licence to bedside - also incorporate a metric on UK economic growth. This should be included in future iterations of the pack.

Action 1

ABPI to follow up with OLS, DHSC and NHS England on broader metrics work on access and uptake, from licence to patient bedside, and including a metric on UK economic growth for future iterations of the pack.

Overview of the operation of the scheme

Richard Mattison (RM) noted the significant work done by DHSC to validate Q2 submissions by companies. RM further noted the increase in price increases and top-up exemption applications, which had been challenging for DHSC resourcing. RM set out that it’s important for companies to understand how DHSC considers applications, with the intention of treating all companies equally. As part of the decision process, DHSC evaluates whether products are uneconomic to supply, patient impact as a result of viability concerns, cost increases to the NHS and whether the relief should be temporary or permanent. DHSC will ensure that this process is as transparent as possible.

RB gave the perspective of a large pharmaceutical company with respect to engagement with the exceptional pricing process, setting out the strict policies maintained by global companies to which UK affiliates are subject. The UK is a relatively small commercial market, with a low single digit proportion of sales. The information requirements of this process are seen in this context as very disproportionate. RB further set out that requests for research and development costs are an absolute red line for companies - the level of granularity across the company’s portfolio is also a huge ask given the commercial sensitivity and global impacts of the ask.

KA reinforced this, adding that ABPI had heard these concerns from a broad range of companies, and there needed to be greater recognition by the department of the type of information companies could actually provide.

Noah Kidron-Style (NKS) recapped the discussion which had taken place at negotiations on this matter. The rationale presented at the time was that there is an expectation that in a standard price increase application, companies should be expected to operate a level of cross-subsidy - the portfolio wide submission allowed DHSC to assess the level of supply risk given the degree of cross-subsidy. NKS added that the exceptional price mechanism is an escape valve rather than a first option for companies.

TKR noted that this is an area we should collectively be watching closely, and if it seems like a significant issue for companies, we should work pragmatically to find a way forward. RA reinforced this, adding that we need to ensure we’re tracking unintended consequences of this feature.

Action 2

ABPI to work with DHSC to continue to monitor portfolio price increase financial returns (PIFRs) as an issue for companies, addressing unintended consequences of the requirement.

Action 3

DHSC to discuss with ABPI sending communications to companies in the coming months to ensure they have clarity about the top-up exemption processes.

End of scheme reconciliation

RM noted plans to process data this week, expecting to publish results as soon as possible. RM noted that DHSC’s preferred approach would be to pay companies that are owed refunds directly, rather than netting off future payments. DHSC will be writing to companies to explain how this will work, DHSC would publish a revised 2023 payment rate, and make payments to scheme members in Q1 2025.

ABPI queried timings and RM noted that there are a number of data publications that are of priority to industry in December 2024 and could not confirm dates.

Disputes

RM noted that 2 disputes had gone to formal dispute resolution - one from the 2019 VPAS and the other under the current voluntary scheme.

Delivery of price erosion mechanism

Tom Slingsby (TS) gave a short update on reference price data, setting out that DHSC had shared reference pricing (RP) with companies for all presentations in the scope of VPAG payments except for around 200 presentations. TS noted it had been a huge effort to calculate and share these.

TS noted that on the date of the operational review, DHSC had received 110 queries from 73 companies related to RP. There are 25 queries still outstanding, with 15 of them follow-up queries.

TS also recognised that companies needed to have certainty before the end of the calendar year. DHSC would write to companies on 13 December 2024 to set out final RP. If companies are still within their 45-day window to raise queries with respect to the RP, they would still be able to do so, though changes resulting from them would be enacted in the next calendar year, except in exceptional circumstances to be determined on a case-by-case basis where the change was financially material to them and doesn’t affect any other companies.

RA noted the large volume of work and the complexity of this process, and that companies would welcome having the ‘draw line’ data as early as possible in December.

DHSC noted that moving the draw line date forward from 13 December may be feasible - but would reduce the time for DHSC to respond to outstanding queries and for companies to note any outstanding issues for resolution in 2024.

TKR summarised that overall companies would prefer to go earlier, though asked if DHSC could assess whether there were any significant risks they were aware of concerning companies they had engaged with. ABPI would follow up with DHSC on timings.

Action 4

DHSC to assess level of risk of moving the draw line date forward and discuss plans for this with ABPI.

Consequences of the older product approach (COOPA)

KA noted that ABPI had shared data from our analysis of our COOPA survey with colleagues for the operational review. KA expressed that ABPI were keen to share background and early findings of the work, but to use time in the meeting to open up for reflections about how we take this work forward.

KA recapped that as per discussions in the previous operational review, attendees felt that we were building an understanding of how we can monitor delivery and operation of the scheme, but felt we were missing potential impacts on the market, which this work will aim to address.

KA noted that this analysis was drawn from our survey of a wide range of companies across industry, seeking to understand the COOPA - one of the most significant changes in VPAG.

KA noted that some of the impacts of this change will be unintended. It is too early to tell with certainty what these impacts will be, but ABPI’s paper shows early warning signs of impacts to launches and medicines viability that we need to continue to explore further. All the data shared in this note was anonymised, but ABPI will share some more detailed case studies with DHSC following the meeting, subject to companies’ permissions.

RB recognised that we all need to make this scheme work and avoid unintended consequences. RB set out that there is significant innovation in older medicines as defined by the scheme, both in terms of modes of delivery and also new technologies.

NKS confirmed this treatment would be considered ‘older’ given the schemes rules and said that where companies were unsure of the application of these rules, DHSC were happy to be engaged. NKS confirmed that DHSC were also mindful of the need to avoid unintended consequences, and agreed that it was too early to tell. NKS agreed that we should start preparing, and suggested DHSC engage with ABPI on developing additional targeted questions for companies.

Action 5

ABPI to share detailed case studies of launch impacts and medicines viability challenges with DHSC, subject to company permission.

Action 6

ABPI and DHSC to engage on targeting questions for the next iteration of COOPA survey.

Insights from company sales reporting and newer medicines rates

Alison Hardaker (AH) set out that the differentiated payment approach for newer and older medicines was a significant element of the scheme. Q2 was the first return from companies which reported this split.

Given this, DHSC undertook significant verification activities, including direct engagement with companies with significant changes. This work identified some initial issues with returns for a small number of companies, which have since been resolved, with accurate data resubmitted in time for the calculation of the 2025 payment percentage. DHSC also acknowledged work with NHS England and ABPI to cross-reference different sources of data.

DHSC did not confirm growth figures in the meeting as these are still in the process of being finalised, but suggested strong growth in newer medicines. DHSC has now received Q3 data, which overall suggests a similar picture. Given 2 quarters of data, it does appear that this is reflective of the market. This will be published in future operational review metrics packs.

TKR asked when DHSC expect to publish the Q3 data, and asked DHSC to set out their expectation of the newer medicines rate.

NKS recognised the urgency of industry’s timelines with respect to rate setting, and the need for stability next year. NKS set out that DHSC expects to publish in the first half of December 2024, but could not give any further detail given the need to go through DHSC’s assurance and clearance process. NKS confirmed that DHSC is expecting the data to show strong growth in newer medicines sales and this will likely have an upwards impact on the 2025 VPAG newer medicine payment rate.

David Watson (DW) noted what an unusual year this is in terms of measuring sales, and expressed that it was clear DHSC was in the process of mapping different sources of data. Given this, DW queried how confident DHSC were in the data that they had.

NKS explained the assurance programme that DHSC had undertaken, mapping presentation level returns with the newer to older split and validating 2023 returns on a company by company basis. NKS said that DHSC thought they had identified all significant issues and that they had done the best work possible to validate the data.

RB noted the importance of being able to confidently determine growth in order to minimise uncertainty for companies. RB gave the example of 2023 VPAS changes, setting out the monetary level uncertainty for her company and extrapolating that level of uncertainty across company wide revenue. RB expressed that this level of uncertainty is material at the shareholder level, and contributes towards perceptions of the UK as being a challenging global environment.

NKS agreed with RB and recognised this was a tricky point. NKS set out that DHSC was taking an unusual step in telling the operational review that the rate will be higher than expected, and expressed that he expected and supported ABPI and other trade associations to signal this to their members.

RA asked NKS about the perceived rates ‘anchor’ in the statutory scheme consultation response, published in October 2024. NKS responded that the statutory scheme payment percentage was set based on earlier data up to Q1 2024, agreeing that this meant it was possible the 2 schemes may diverge. It is the policy of DHSC to retain broad commercial equivalence between the 2 schemes, and DHSC reserves the right to consult on statutory scheme rates in the new year should this be necessary to maintain broad commercial equivalence with the 2025 VPAG payment percentage.

Action 7

ABPI and trade associations to communicate DHSC rate signal to members of the VPAG and to members of each of the trade associations.

VPAG objective 3: supporting UK economic growth

Investment programme

Alex McLaughlin (AM) set out the decisive move towards implementation that we have seen with the investment programme, detailing progress on commercial research delivery centres (CRDCs), grand challenge projects, and collaborative research and development awards. AM continued to describe the health technology assessment projects underway, saying that these projects were beginning to have a tangible impact.

AM described progress on impact metrics, which should be decisively demonstrating impact by the end of the scheme. OLS has worked with others in order to find surrogate metrics that can be used to broadly measure macro impacts.

Joe Edwards (JE) agreed that good progress had been made, and thanked colleagues for support. JE flagged that an important juncture will be in issuing communications to industry, showing the programme’s objections with respect to the UK. JE noted that we should prioritise finding a way to demonstrate the direction of travel, noting that indicators will necessarily lag.

Any other business

None.